I know nothing about taxes. I’m only 19 and all this time my parents did taxes for me. They filed for taxes as I’m dependent. At that time I work at different jobs. Some of my jobs were paying me in cash other in check. First job I had was at the age of 16, where restaurant was paying me by check. Now I work as part time for a financial company. I work 20 hours a week ( part time ). My salary is just enough to pay for my car, school ( 4 which I pay in cash), and have some money for a weekend. My questions are :
1) Should I field for taxes by myself or still filed with parents ?
2) When is the best time for me to file for taxes ?
3) I heard I can save some receipts and get some money back while filing for taxes? Is that true? Buying which items I should save receipts ?
4) My friend got financial aid and some money back – is that’s because he doesn’t work for check ?
Thank you for your time and I hope I will understand this entire system. Its about time to enter into real world – and I want to be prepared. Thanks
Answers & Comments
Verified answer
Get IRS pub 501. sit down with your parents and do the support test worksheet. You will be surprised how much they spend to house and feed you. They will be shocked to realize how much you are spedning on car and school.
The worksheet will show whether or not you supported yourself. if you did support yourself, they can't claim you and your tax return will not tax the first $8950 you made and any remaing tax may be covered by the education credit. (If so, you'd get your withholding back.)
If you did *not* support yourself, THEY can claim you (and your education expenses). Your tax return would exclude up to $5450 of income and start taxing you at 10% on the next $8000. (The tax rate goes up from there.) If your tax bill is higher than your withholding, you would owe.
Receipts generally don't help you when you live at home. (Your receipts would have to add up to more than $5450.)
As for your friend, stop comparing yourself to him. Financial aid is not a tax return. Refunds are based on what you owe and if he failed to report all of his income, he could face an audit in the future (very expensive!). Cash jobs mean that YOU pay 15% payroll taxes from your pocket because the payer didn't pay the other half. Most people fail to put enough aside and OWE at tax time.
If you are earning income, and make enough to have to file ($5450 this year if you are an employee and a dependent, $8950 if you are an employee and not a dependent, $400 if you are just being paid in cash with no taxes taken out) then you have to file your own return. This was the same other years, except the limits as an employee were lower, so you need to find out what your parents really did those other years - they can't just include your income with their return.
You can file between mid-January and April 15, 2009.
Forget about the receipts, you wouldn't have enough to itemize. You'll get a form from your school for your tuition - if you are a dependent, give it to your parents, they'll use it on their return. If you are not a dependent, it might give you some money back on your return, unless you are already getting back everything withheld for federal income tax
Not sure what you're asking about your friend's money back. If he didn't have income, not likely he'd have gotten anything back from a tax return. As far as financial aid, would depend on his circumstances. You say he doesn't work for a check - if he works for cash, and doesn't report it on a tax return, what he's doing isn't legal and he's setting himself up for major trouble down the road.
the only TIME YOU FILE FOR TAXES IS AFTER YOU GET YOUR W-2(s) at the end of January and before April 15th for the prior year.
If you made money - YOU still have to file a return - even if your parents claim you - I hope you are getting SOME federal income tax deducted from each paycheck or you could wind up owing a lot come tax timer - talk to your parents - have them look at your pay stubs to see if you're getting enough tax withheld